session 2 professional bodies study

8/11/2019 Session 2 Professional Bodies Study

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Public Consultation & Seminar on Fixing of Prices/Scale of Fees by Professional Bodies19 May 2014 (Monday)PNS Auditorium, PNS Tower, Kuala Lumpur

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SHILA DORAI RAJ

Chief Executive Officer of the

Malaysia Competition Commission

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PUBLIC CONSULTATION & SEMINAR ON FIXING OF

PRICES/SCALE OF FEES BY PROFESSIONAL BODIES

UNDER THE COMPETITION ACT 2010

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Part 1What are Professional Bodies?

Part 2Findings

Part 3Position of Professional Bodies

Under Competition Act 2010

Part 4Future Directions


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Overview of the

Market Review on Issues Relating to the Fixing ofPrices / Fees By Professional Bodies

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Q4 2012 The MyCC commissioned consultant to begin the market review

Q2 2013 The findings of the research project on price fixing by professional bodieswere approved by the Commission on 16 July

Q3 2013Report of the results of the study was uploaded to the MyCC websiteon 19 August

Q3 2013Letter to the 5 sectors identified (NO legal authority to fix prices/fees) - to providean explanation for these practices were sent on 14 August

Q4 2013 The MyCC has received comments from professional bodies

Q2 2014 Public Consultation with Professional Bodies on 19 May 2014


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Definition of Professional Bodies

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Professions typically has 3 main characteristics:

a) Possession and use of expert and specialized knowledge;

b) Strict control of entry into profession; and

c) Existence of a professional code or conduct of ethics.

ProfessionsLearned

professionsLiberal

professionsProfessional

services

There is no legal definition of professionalbodiesin Malaysia.

BlacksLaw Dictionary defines a professionalas a person who belongs to

a learned profession or whose occupation requires a high level of training

and proficiency.


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Definition of Professional Bodies (Continue)

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Conventional

Law

Medicine

ReligiousMinistry

Modern

Otheroccupations

Traditionally 3

learned professions

For the purposes of Government policy - the

scope and classification of professions orprofessionals depend heavily on the

context in which such classification is made,

i.e. the scope, content and objectives of the

policy in question.


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Research Result

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Practice of Price-Fixing by Bodies/Associations in the

Services Sectors Malaysia

Research was carried out on 131 bodies/associations that are

grouped into 34 sectors.

The grouping of these sectors is guided by the relevant law

pertaining to the sectors (where available) and the WTO ServicesSectoral Classification.


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Architects Engineers Quantity surveyors Land Surveyors Valuers, Appraisersand Estate Agents

Town Planners Accountants Legal Practitioners Company

Secretaries

Medical

Practitioners

Dental Practitioners Optometrists Pharmacists Allied health

professionals

Midwives and

nurses

Chemists Scientists Veterinary surgeons Counselors Alternative Dispute

Resolutions (ADR)

Arbitrators

Alternative Dispute

Resolution (ADR)

Mediators

Landscape

Architects

Social workers Logistic & Transport

Executives

Material scientists/

specialists

Public relationexecuitves

Intellectual propertypractitioners

Environmentconsultant

Investors relationsexecutives

Life Insuranceadvisers & financial

planners/

practitioners

Actuaries Agricultural

specialists

Forestry specialists Plantation managers Food analyst

The 35 Sectors Studied are as Follows:


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PRESENTATION OVERVIEW

Part 2 - Findings

Part 1 - What are Professional Bodies?

Part 4 - Future directions

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Part 3 - Position of Professional Bodies Under CA 2010


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Finding No. 1 -

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10 sectors are found to be governed by respective bodies/associationsthat are empowered by legislation to regulate such sectors and scales

of fees are established for their members:

SECTOR /

GOVERNINGBODY

GENERAL

POWER TOREGULATE

SPECIFIC

POWER TO FIXSCALE OF SCALE OF FEES

1. Architects:

Board of

Architects

Malaysia

X

S35 of the

Architects Act

1967

X

S4(1)(d) & (dd)

of the Architects

Act 1967

Architect (Scale of Minimum Fees) Rules 2010

[P.U.(A) 53/2010]

2. Engineers:

Board of

Engineering

Malaysia

X

S4 of the

Registrations of

Engineers Act

1967

X

S4(1)(d) of the

Registrations of

Engineers Act

1967

I - Notification of Scale of Fees [P.U.(B) 548/1998]

ii- Notification of Scale of Fees for Housing

Development [P.U.(B) 288/1997]


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Finding No. 1 (Continue)

12

SECTOR /

GOVERNING

BODY

GENERAL

POWER TO

REGULATE

SPECIFIC

POWER TO FIX

SCALE OFSCALE OF FEES

3. Quantity

Surveyors:

Board of Quantity

Surveyors Malaysia

X

S26 of the

Quantity Surveyors

Act 1967

X

S 4(d) of the

Quantity

Surveyors Act

1967

i- For Government projects: Scale of Fees For

Consulting Quantity Surveyor (Revised 2004)

issued by the Ministry of Finance, to be read

together with the Notification made under

the Registration of Quantity Surveyors Act

1967 [P.U.(B) 510/1986].

ii- For non-Government projects:

Notification made under the Registration of

Quantity Surveyors Act 1967 [P.U.(B) 510/1986].

4. Land

Surveyors:

(a) The Land

Surveyors Board

(Peninsular

Malaysia &

Labuan)

X

S21(1) of the

Licensed Land

Surveyors Act

1958

Regulation 26(1) and 13thSchedule of the

Licensed Land Surveyors Regulations 2011

[P.U.(A) 331]


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13

SECTOR /

GOVERNING

BODY

GENERAL

POWER TO

REGULATE

SPECIFIC

POWER TO FIX


(b) Sabah

Surveyors Board

X

S19(1) of the

Surveyors

Ordinance 1960

[No. 22 of 1960]

The 2nd Schedule of the Surveyors (Registration

and Administration) Regulations 1989.

(c) Land

Surveyors Board,

Sarawak

X

S31(1) of the Land

Surveyors

Ordinance 2001

[Chapter 40]

X

S31(2) of the

Land Surveyors

Ordinance 2001

[Chapter 40]

Rule 36(1) and the 1stSchedule of the Land

Surveyors (Conduct of Cadastral Land Surveys)

Rules 2003.

5. Valuers,

Appraisers and

Estate Agents:

Board of Valuers,

Appraisers and

Estate Agents

X

S32 of the Valuers,

Appraisers and

Estate Agents Act

1981

Rule 48(1) and 7th Schedule of the Valuers,

Appraisers and Estate Agents Rules 1986

[P.U.(A) 64/86].


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SECTOR /GOVERNING

BODY

GENERALPOWER TO

REGULATE

SPECIFICPOWER TO FIX


6. Town Planners:

Board of Town

Planners

Malaysia

X

S8 of the Town

Planners Act 1995

[Act 538]

X

S8(c) of the

Town Planners

Act 1995 [Act

538]

Scale of Professional Fees and General Conditions

of Engagement 2005

7. Accountants:

Malaysia Institute

of Accountants

X

S10(a) of the

Accountants Act

1967

i - By-Laws (On Professional Ethics, Conduct and

Practice) of the Malaysian Institute of

Accountants

Ii - The Recommended Practice Guide 7 (Revised):A Guide to Charging for Professional Assurance

Services (Circular MF/2010)non-binding

benchmark for professional accountants in

public practice services.


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SECTOR /GOVERNING

BODY

GENERALPOWER TO

REGULATE

SPECIFICPOWER TO FIX


8. Legal

Practitioners:

(a) The Malaysian

Bar7

X

S6 of the Legal

Profession Act

1976

X

S113(3) of the

Legal Profession

Act 1976

Solicitors Remuneration Order[P.U.(A) 520/2005]

(b) Chief Judge of

Sabah & Sarawak

+ Sabah Law

Association

X X

Para.17(c) of the

Advocates

Ordinance

(Sabah Cap. 2)

Advocates RemunerationRules 1988

(G.N.S 17 of 1988)

(c) Chief Judge ofSabah & Sarawak

+ Advocates

Association of

Sarawak

X XS17(c) of the

Advocates

Ordinance

Sarawak 1958

(Sarawak

Cap.110)

Advocates RemunerationRules 1988[Swk. L.N.(F) 72]


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SECTOR /

GOVERNINGBODY

GENERAL

POWER TOREGULATE

SPECIFIC

POWER TO FIXSCALE OF SCALE OF FEES

9. Medical

Practitioners:

Malaysian

Medical council

X

S36(1) of the

Medical Act 1971

i - For medical practitioners in the private

healthcare facilities and services, the scale of

fees are made under the Private Healthcare

Facilities and Services Act 1998 [Act 586]:

Ii - Private Healthcare Facilities and Services

(Private Medical Clinics or Private DentalClinics) Regulations 2006 [P.U.(A) 137/2006]

Iii - Private Healthcare Facilities and Services

(Private Hospitals & Other Private Healthcare

Facilities) Regulations 2006 [P.U.(A) 138/2006].

10. Dental

Practitioners:

Malaysian Dental

Counci

X

S43(1) of theDental Act 1971

i - For dental practitioners in the private

healthcare facilities and services, the scale of

fees are made under the Private HealthcareFacilities and Services Act 1998 [Act 586]:

ii - Private Healthcare Facilities and Services

(Private Medical Clinics or Private Dental

Clinics) Regulations 2006 [P.U.(A) 137/2006]

Iii - Private Healthcare Facilities and Services

(Private Hospitals & Other Private Healthcare

Facilities) Regulations 2006 [P.U.(A)138/2006].


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Finding No. 2 -

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3 sectors in which the governing authorities are empowered by aspecific provision to fix scales of fees but have yet to do so:

SECTOR/GOVERNING

BODY

SPECIFIC POWER TO FIX FEES/PRICES SCALE OF FEES

1. Midwives and

Nurses:

(a) The Malaysian

Nursing Board

X

S 5(1)(g) of the Nurses Act 1950power to fix

fees lies in the Minister through regulations

None

(b) The Malaysians

Midwives Board

X

S5(1)(f) of the Midwives Act 1966

None

2. Counsellors:

Malaysian Board ofCounsellors XS 12(h) of the Counsellors Act 1998 None

3. Food Analysts:

Malaysian Food

Analysts Council

X

S5(1)(c) of the Food Analysts Act 2011

None


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Finding No. 3 -

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5 sectors in which the governing bodies are given the general power toregulate the sector but no scales of fees have been fixed:

SECTOR/GOVERNING

BODY

GENERAL POWER TO REGULATE THE SECTOR SCALE OF FEES

1. Optometrists:

Malaysian Optical

Council

X

S42(1) of the Optical Act 1971 None

2. Pharmacists:

Pharmacy Board

Of Malaysia

X

S22(1)(j) of the Registration of Pharmacists Act 1951

None

3. Chemists:

Malaysian Institute

Of Chemistry

X

S8 of the Chemists Act 1975

None

4. Veterinary Surgeons:

Malaysian Veterinary

Council

X

S39(1) of the Veterinary Surgeons Act 1974

None

5. Medical Assistants:

Medical Assistants

(Registration) Board

Malaysia

X

S22 of the Medical Assistants (Registration) Act 1977

None


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Finding No. 4 -

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5 sectors prescribe fees/prices for their members even though theyare not empowered by any law:

SECTOR/GOVERNING

BODY

LEGAL

AUTHORITY TO

FIX PRICES/

FEES

SCALE OF FEES

1. Company Secretaries

The Malaysian Institute of

Chartered Secretaries and

Administrators (MAICSA)

None Yes

2. Arbitrators

(a) Malaysian Institute of

Arbitrators (MIARB)

None Rule 28.1 of the MIARB Rules 2000

and MIARB Scale of Arbitrators Fees(b) Malaysian Institute of

Architects (PAM)

None PAM Arbitration Rules 2010

3. Mediators

(a) Malaysian Institute of

Arbitrators (MIARB)

None MIARB Mediation Rules 2003


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Finding No. 4 (Continue) -

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SECTOR/GOVERNING

BODY

LEGALAUTHORITY TO

FIX PRICES/

FEES

SCALE OF FEES

(b) Malaysian Mediation

Centre (MMC)

None Malaysian Mediation Centres rate of

mediators fees

(c) Malaysian Institute of

Architects (PAM)

None PAM Mediation Rules

4. Landscape Architects

Institute of Landscape

Architects Malaysia (ILAM)

None Institute of Landscape Architects

Malaysia Scale of Fees

5. Dental Practitioners

Malaysian Dental

Association (MDA)

None Malaysian Dental Association

Recommended Scale of Fees


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Part 4 - Future directions

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Part 2 - Findings


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Professional Bodies Under the CA 2010

Under Competition Act 2010 [Act 712], price-fixing made

by the State (through legislation) or professional bodies

specifically empowered by the legislation, would fall under

the exclusion under Section 13 and paragraph (a) of theSecond Schedule of the Competition Act 2010 [Act 712].

Competition Act 2010 [Act 712] prohibits price-fixing by

professional bodies that do not have any lawful authority

to do so. However, exemptions may be granted if theCompetition Commission is satisfied that the elements in

Section 5 (a) (d) of the Competition Act 2010 [Act 712]

are fulfilled.


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Malaysian Practices in Regulating Prices / Fees

The scale of fees for a sector regulated by law is contained

in the statute itself, or any other legal instrument made

under any statute or other lawful authority and having

legislative effect; and

A governing body that has regulatory authority over a

sector establishes a scale of fees for that sector (either

through its specific power to fix prices/fees for that sector,

or its general powers to regulate the said sector).


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Malaysian Practices in Regulating Prices / Fees

(Continue)

In the event that a body/association in the services

sectors establishes a scale of fees without being

empowered by any lawful authority to do so, suchconduct of price-fixing is prohibited under the

Competition Act 2010 [Act 712] and does not fall

within the exclusion under Paragraph (a) of the

Second Schedule of the Competition Act 2010 [Act

712].


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Acknowledge That:

Professional bodies may wish to provide assistance to new

and inexperienced members by recommending benchmark

prices as a guide. However, it has been suggested that

professional bodies can still assist members without

resorting to pricing mechanisms which are anti-

competitive in nature, such as working out members

profit margin and overhead costs.

It is also feared that highly competent professionals would

leave the profession because they feel that they are notbeing rewarded enough.70 There are, however, empirical

studies that indicate that free competition is not a

hindrance and actually leads to a more overall wealth

creation.


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Application of CA 2010 Must be Considered Together

with other Important Factors such as:

a) Other Government policies/objectives and publicinterests

The regulation of professional markets may alsopursue specific Government policies and objectivesas well as public interest goals, other than thecorrection of market failures. A balance should bestruck between economic factors (avoiding

restrictions of competition) and what is consideredas non-economic factors.


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Application of CA 2010 Must be Considered Together

with other Important Factors such as (Continue):

b) Other historical, cultural, institutional and socialfactors

It is noted that competition law policy is oftenbasedon a multiple set of values that are neithereasily quantifiable nor reduced to a single economicobjective. These values may reflect a societyswishes, culture, history, institutions and other

factors that cannot be ignored nor shouldnecessarily be ignored.


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Position of other Jurisdictions

Other jurisdictions have adopted varying positions regarding

professional regulations (including price-fixing) that are made by

the State or professional bodies with legal governing authority.

It is noted that the United States, the European Union and theUnited Kingdomtake a strict position on this matter, allowing anti-

competitive professional regulations by law or delegated legal

authority only in limited circumstances.

On the other hand, Canadatakes a less rigid approach of allowing

anti-competitive professional regulations, even when the

professional body only has a general legal mandate to regulate

such profession (without the specific power to fix prices/fees).


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Part 4 - Future Directions



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Part 2 - Findings


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Future Directions:

1. Meeting with 5 sectors identified in the study withNO legal authority to fix prices/fees to provide anexplanation for these practices

2. Collaboration with the Malaysian Productivity

Corporation (MPC)


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Future Directions:

4. The MyCC will assess whether the price fixing/scaleof fees should be exempted on a case-by-casebasis.

3. Since the document was uploaded on the MyCC

website, the following was noted:

i. The MAICSA withdrew their recommended

fees.

ii. Several associations have requested meetings.

iii. The MyCC requested 5 sectors to provide

explanation.


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session 2 professional bodies study

Documents